What is Capitalism?

You've probably heard people talk about this thing called capitalism. Whether you’ve read about capitalism or have overheard your dad complaining about it, you may be wondering, WTF does it mean?! Well, I am here to explain the concept in the simplest terms possible so you can better understand our country and the economic system in which we find ourselves.

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What is capitalism?

Simply put, capitalism is a social and economic system where a country's means of production, trade, and industry is controlled by private companies and owners, as opposed to the state. An example of capitalism can be seen in the prison system, where many prisons are operated by private companies, which make profit from the prisoners and the products they produce while they serve their sentences.

A capitalistic society is driven by the motive to earn profit. Everyone wants to make money, which is simple, but the conditions necessary for capitalism makes it more sinister. Capitalism thrives in free market societies, dictated by the private companies that are in competition. A free market, technically, requires no government intervention, which is why capitalists usually land on the right of the political spectrum. In America, the government regulates businesses for reasons of social welfare and public safety (think the Food and Drug Administration making sure what you're eating is...well...edible), so we don't operate in a truly free market.

Where did it come from?

Capitalism grew from the death of feudalism, a term you may remember from your social studies class. Feudalism is a hierarchical system where the wealthy own land, while the poor farm said land in exchange for a place to live, as well as protection. In this system, a poor farmer could never climb up the ladder and become anything other than a poor farmer. This system was not only oppressive and unequal, but it also thwarted financial competition (meaning society didn't grow too much during this time period).

When the farmers revolted, they suddenly owned their own land, and were competing with each other to sell crops. Those who were the most savvy and competitive could make more money and climb up the class system. This also caused the rich to start paying those who worked their land. And alas, capitalism became a way of life.

How does it affect us?

Capitalism affects you pretty much every day. It's how you got that iPhone in your hands, or what made your favorite sharks on Shark Tank able to invest in so many companies.

Specifically, capitalism's affect on you depends on your role in society. Are you a worker or a boss? If you're a boss, chances are you like capitalism, because gaining more profit means the ability to pay your workers more, and hopefully improve their lives. If nothing else, it means more money in your pocket. If you're a worker, capitalism may seem stacked against you, created to make the rich richer and to keep you working for them.

Why do people support it?

Like I said above, it's more likely that a boss will support capitalism than a worker. Take Donald Trump for example: He greatly benefited from capitalism, but it was probably at the cost of many workers who struggled to make a living wage as Trump's businesses thrived.

Supporters of capitalism feel that competition in the economic system is necessary. It prompts innovation. Everyone wants to create and sell the next it product, which, in turn, means there's constant movement in industries. All of this helps our placement within the greater global economy.

Capitalists believe that those who do well, deserve it. On the other hand, those who struggled, simply didn't work hard enough.

Why do people oppose it?

Those who oppose capitalism believe it fosters inequality. It makes the bosses richer, as they continue to exploit the workers — cutting wages and benefits in order to increase profit. They believe that the idea that those who work hard, benefit, is false because there are other social factors (like racism and sexism) at play.

Capitalism also has a negative impact on the environment. The more we produce, the more resources we use, until one day, we have none. Also, many of the products being created (like cars) are inherently bad for the environment and add to the ever increasing issue of global warming. For these reasons, anti-capitalists (like former presidential candidate Bernie Sanders) tend to find themselves on the left side of the political spectrum.

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